TMI Blog2018 (7) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax in the year of receipt as interest on excess compensation u/s 28 of the land acquisition Act form part of the compensation only which is chargeable to tax u/s 45(5) in the year of receipt. However for the purposes of quantification the ld AO is directed to verify the exact amount of interest and compensation received. Credit of the tax and TDS - Held that:- Bank interest is chargeable to tax in the hands of the assessee as it is not covered by the Principles of mutuality relying on the decision of the Hon'ble Supreme Court. With respect to the chargeability of the compensation and interest thereon we have held that it is chargeable to tax in the year in which it is received. Therefore, as we have already held that, there is an income, which is chargeable to tax in the hands of the assessee; this appeal of the revenue becomes infractuous in view of the chargeability of enhanced compensation of ₹ 8.73 crores and bank interest also. In view of this the amount paid by the assessee u/s 140A and the amount of TDS is required to be adjusted against the tax liability of the assessee. Therefore, we direct the ld AO to recompute the tax liability for assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002-03 1. These are the bunch of appeals for different assessment years pertaining to New Vikash Cooperative House Building Society Ltd, Faridabad, Haryana involving common issues. These appeals are heard together and they are disposed of by this common order. 2. First we take up the appeal of the revenue for the Assessment Year 2002- 03 and state the facts of this year. The revenue has filed this appeal in ITA No. 2217/Del2008 raising following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) was correct in holding that the activities of the Society were governed by the principle of mutuality, as such it was a mutual concern and its profits in question are not income as defined u/s 2(24) of the Income Tax Act, 1961 without appreciating that the Society itself declared its taxable income on account of bank interest voluntarily in its return of income filed by it ? 2. Whether in law it is still an open question that the compensation and/or enhanced compensation would be taxable only when it attained finality irrespective of the remedial provisions introduced in the Act from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on behalf of its member and cannot be charged to tax in the hands of the assessee. The ld AO rejected the contention of the assessee and accordingly he held that the interest of ₹ 12804783/- for enhanced compensation of land computed on accrual basis for Financial Year 2002-03 is charged to tax. Consequently, the total income of the assessee was computed at ₹ 12863000/-. The assessment u/s 143(3) read with Section 147 of the Act was passed on 27.10.2006. 4. Assessee aggrieved with the order of the ld AO preferred appeal before the ld CIT(A) contesting that income is not chargeable to tax in the hands of the assessee and further the activity of the assessee is governed by the principles of mutuality and hence it is even otherwise not chargeable to tax. The ld CIT (A) held that the assessee is governed by the Principles of mutuality and it is a mutual concern hence, the income defined u/s 2(24) of the Act is not chargeable to tax. With respect to the compensation he relying upon the decision of Jurisdictional High Court in case of CIT Vs. Prem Singh dated 17.01.2007 held that the amount of interest on late payment enhanced compensation is not taxable in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive of the remedial provision included in the income w.e.f 01.04.2004 u/s 45(5)(c) of the Act. This issue has already been decided by the Hon'ble Supreme Court in case of CIT Vs. Ghanashyam (HUF) 315 ITR 1, wherein, it has been held that the enhanced compensation is liable to be taxed u/s 45(5) in the year of receipt and interest is also chargeable to tax in the year of receipt as interest on excess compensation u/s 28 of the land acquisition Act form part of the compensation only which is chargeable to tax u/s 45(5) in the year of receipt. However for the purposes of quantification the ld AO is directed to verify the exact amount of interest and compensation received . Therefore, ground No. 2 of the appeal of the revenue is allowed. 10. Accordingly, the appeal of the revenue is allowed. ITA No. 2218/Del/2008 Assessment Year 2003-04 11. The appeal of the revenue for Assessment Year 2003-04 also involves the similar grounds, which were decided in appeal of the revenue for Assessment Year 2002-03. We have already given our reasons for deciding the above appeal and for similar reasons we allow ground Nos. 1 and 2 of the appeal of the revenue. However for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2007-08 17. The revenue against the order of the ld CIT (A) prefers this appeal, Faridabad dated 24.02.2010. 18. The revenue has raised the following grounds of appeal in ITA NO. 1679/Del/2008 for the Assessment Year 2007-08:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of ₹ 32,71,799/- made by the Assessing Officer on account of interest income earned by the Society on FDRs and saving accounts and ₹ 5,80,308/- on account of expenditure debited to Profit Loss Account for the purpose of earning interest income by holding that the assessee society is declared to be a mutual concern governed by the principles of mutuality and thus any profit earned by which during the year under consideration cannot be subjected to tax within even though the ingredients of mutuality are missing in this case. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of ₹ 32,71,799/- made by the Assessing Officer on account of interest income earned by the Society on FDRs and saving accounts disregarding the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present appeal:- ( 2006) -104-TTJ-(DELHI)-724 (2003)-184-CTR-(DELHI)-274 Judgment of the Hon‟ble Delhi High Court dated 09.12.2010 in ITA No. 1288 of 2010 in the case of Cit Vs. Delhi Gymkhana Club Ltd, 23. The revenue has raised the following grounds of appeal in ITA NO. 3791/Del/2011 for the Assessment Year 2008-09:- 1. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law, in deleting the addition of ₹ 2,86,57,418/- made by AO on a/c of capital gain on enhanced compensation and addition of ₹ 1,70,99,190/- on account of interest on enhanced compensation for both of these payments are taxable in the year of receipt in view of judgment of the Hon‟ble Apex Court in the case of CIT vs Ghanshyam (HUF) (2009) 315 ITR 1 (SC). 2. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law, in ignoring the TDS certificate issued by the LAO, annexed with the return of income and treasury challan slip filed by the assessee wherein it is clearly mentioned that the payment of ₹ 1,70,99,779/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king decision that the amount of ₹ 4,57,57,197/- received by the appellant during the year is in the nature of interest accrued upto 01.09.2002 without any effort to get/seek clarification from LAO. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in facts and in law in deleting the addition of ₹ 5,01,804/- made by AO on account of inadmissible expenditure claimed as these were not meant for the purpose of earning interest income and capital gain. 24. Brief facts of the case are that the assessee filed nil return of income on 27.03.2009. The assessee claimed that it is a mutual concern and its income is not chargeable to tax. The ld AO rejected the contention of the assessee and held that the interest income on FDR in saving banks account amounting to ₹ 5961442/- cannot be covered under the Principles of mutuality. 25. The assessee also received similar interest from HUDA of ₹ 17099779/- which the ld AO holding that this interest is also not covered by the principles of mutuality also added to the total income of the assessee. Accordingly, total income of the assessee was assessed u/s 143(3) of the Act vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the assessee shall be deemed to be the income of the year in which it is received. Accordingly, we allow ground Nos. 1 and 2 of the appeal of the revenue holding that the compensation and interest thereon is chargeable to tax in the year in which it is received. However for the purposes of quantification the ld AO is directed to verify the exact amount of interest and compensation received . 32. Ground Nos. 3 and 4 of the appeal are with respect to the admission of the additional evidence by the ld CIT (A). 33. We have noted that the additional evidence are part of the supplementary submission made by the assessee which was based on the statement of account of Land Acquisition Officer and were also available in the assessment record. The ld CIT (A) has given his finding that the amount of interest has been calculated on the reducing balance by considering the payment made towards enhanced compensation first. Therefore, there was no additional evidence in view of this ground No. 3 of the appeal of the revenue is dismissed. 34. Ground No. 4 5 is against the order of the ld CIT (A) for not granting any opportunity. In view our decision in ground No. 1 and 2 the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. With respect to the bank interest it was claimed that same is not chargeable to tax under principles of mutuality. Consequently assessment order u/s 143(3) of the Act was made by the ld AO on 13.12.2013 rejecting the explanation for both the income and held that they are chargeable to tax in the hands of the assessee and consequently, total income was determined at ₹ 31433400/-. Therefore, the assessee is in appeal before us. 43. We have heard the rival contentions. 44. The ground Nos. 1 and 4 of the appeal are not pressed before us Therefore, same are dismissed. 45. Ground No. 2 of the appeal is with respect to taxation of enhanced compensation and interest thereon. WEF 01.04.2010, there is a change in the taxability of computation mechanism of enhanced compensation and interest on enhanced compensation. Compensations is chargeable to tax u/s 45(5) of the Income Tax Act, 1961 in the year in which it is received. There is no dispute with respect to chargeability of that sum. The only dispute remains is that how the interest on the enhanced compensation would be chargeable to tax. The provision of section 56(2) (viii) provides that income by way of interest rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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